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How to Effectively Use Blockchain for Corporate Sustainability and Global Development

By Resonance Fellows Matt Iacobucci, Esteban Echeverria, and Henry Vogt

 

Blockchain has been massively overhyped—even by the hyperbolic standards of the tech industry. For a period in 2015-2017, even the mention of blockchain on an earnings call could send a company’s stock price soaring. Following the collapse of Bitcoin prices and other crypto currency prices in late 2017, the blockchain hype cycle began to wane. Yet the technology behind blockchain—distributed ledger technology (DLT)—is beginning to mature. When applied judiciously, blockchain is emerging as a valuable tool for sustainable development.

Resonance recently partnered with Matt Iacobucci, Esteban Echeverria, and Henry Vogt of the UVM Sustainable Innovation MBA program to research the blockchain use cases most likely to catalyze sustainable development in frontier and emerging markets. The result of this work is a blockchain feasibility framework designed to help our clients determine which (if any) blockchain applications and service providers can help them best achieve their business and sustainability goals. The team is excited to share some findings from the project.

Applications for sustainable development

Blockchain is defined as “a technology that enables immutability and integrity of data in which a record of transactions made in a system are maintained across several distributed nodes that are linked in a peer-to-peer network”. With respect to international development, blockchain can be useful in cases where a group of stakeholders must share data in real time, with no one central institution opaquely holding the data.

Consider, for example, the multi-stakeholder environment that makes up a global supply chain for a multinational corporation in the seafood industry⁠. As is often the case, the most vulnerable stakeholders in these environments are the workers who make up the “last mile” of complex supply chains. These workers can be vulnerable to exploitation or basic human rights violations as a result of unfair labor practices hidden deep in the supply chain. A fishing trawler that employs fisherfolk and sells its catch directly to the market is often not required to provide any documentation of its labor practices to participants further downstream in the supply chain. This presents opportunity for exploitation, where workers’ health and safety is left to the discretion of the owners of the vessel.

Even when a blockchain solution is feasible, it’s important to consider whether such a solution is necessary. Oftentimes there are simpler solutions that are also more cost-effective and offer lower risk than blockchain to begin with.

This reality of worker exploitation and human rights violations in supply chains is of particular concern to large companies owning and running global operations. In such environments, companies can preserve data integrity through a database structured to record every change with immutability, which prevents network participants from tampering with the data. Blockchain technology offers such a database structure, allowing for distributed verification of workers’ conditions using digital identities, or tracking provenance of goods in supply chains by combining other technologies like geolocation and IoT sensing devices.

This is just one example of how stakeholders can apply blockchain technology for sustainable development. Other promising avenues include energy and the environment, land registry, aid tracking, and government.

The case for caution

The intention of this project was to “cut through the hype” that has developed with the rise of the blockchain industry. Our blockchain feasibility framework achieves this end by first identifying which components of a potential blockchain project might make it infeasible from the start.

One of these challenges is the ability to digitize information. If the organization and its stakeholders cannot digitize the information they are working with, then there is no reasonable case for a blockchain solution. There are additional challenges related to the permanent storage of data and information associated with blockchain networks, others related to stakeholder participation, and still others associated with the ability for blockchain networks to operate under uncertain regulatory environments.

Even when a blockchain solution is feasible, it’s important to consider whether such a solution is necessary. Oftentimes there are simpler solutions that are also more cost-effective and offer lower risk than blockchain to begin with.

The future of the industry

Blockchain is an exciting and disruptive technology that continues to make headlines long after the big run-up to and subsequent crash of the open cryptocurrency markets in late 2017. As we continue to monitor the ever-evolving landscape, we’re excited to see solutions providers paying more attention to the  sustainability and equity of blockchain applications—from remittances and stable stores of value in volatile currency markets, to successful pilots delivering both business and stakeholder value in agricultural supply chains across sub-Saharan Africa. We look forward to seeing more sustainable development applications in frontier markets, as the blockchain industry continues to mature.

 

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